All the major mortgage product categories saw declines in new originations during the first quarter, but the jumbo and home-equity sectors held up slightly better, according to a new ranking and analysis by Inside Mortgage Finance. The conventional-conforming sector took the biggest hit, as new production dropped 25.9 percent from the fourth quarter of 2013 to an estimated $123 billion in the first three months of this year. The vast majority of these loans still end up being financed by Fannie Mae and Freddie Mac, and the two government-sponsored enterprises continue to draw a lot of their business from the ebbing refinance market. Fannie and Freddie securitized...[Includes two data charts]

The amount of subprime mortgages outstanding continues to decline, with servicers in the sector focusing on loan modifications. An estimated $380 billion of subprime mortgages were outstanding as of the end of the first quarter of 2014, according to a new ranking by Inside Nonconforming Markets. With few subprime originations in recent years, the amount of subprime mortgages outstanding fell by 17.2 percent compared with the first quarter of 2013 ... [Includes one data chart]

After years of losses from holdings of nonprime mortgages, Fannie Mae and Freddie Mac reported significant income relating to subprime mortgages and Alt A loans in the first quarter of 2014. The income was largely tied to settlements of lawsuits filed by the Federal Housing Finance Agency against non-agency mortgage-backed security issuers, and losses from nonprime mortgages were also minimal during the quarter ... [Includes one data chart]

Nonprime lender Citadel Loan Servicing increased its maximum loan size this week to $1.5 million from $1.0 million. Dan Perl, Citadel’s CEO, said the lender is on track to close $14 million in originations in May and $15 million in June. He added that Citadel is close to entering the non-agency mortgage-backed security market. Walter Investment Management revived Ditech Mortgage and the lender will offer jumbos, among other products ... [Includes four briefs]

The advance policies of nonbank servicers have led to disruptions in payments to investors in non-agency MBS following servicing transfers from banks, according to Fitch Ratings. The differences are particularly pronounced on jumbo and Alt A deals, with advance disruptions recently concentrated on MBS previously serviced by Bank of America. “Bank and nonbank servicers for residential MBS transactions typically follow the same general advancing guidelines,” Fitch noted. “However, nonbank servicers generally make the determination to stop advancing earlier than bank servicers.” On average, for jumbo MBS and Alt A MBS, nonbanks advance missed...

Even though the jumbo securitization market continues to struggle, there are signs of life in other non-agency niches, including non-owner-occupied mortgages and non-prime home loans. Five Oaks Investment Corp. recently launched a new product menu, saying it will purchase on a correspondent basis non-owner-occupied mortgages with loan amounts of up to $1.5 million. Company managing director Dave Akre told Inside MBS & ABS that the goal is to securitize. “We are...

Rating services and due-diligence firms have plenty of time to analyze originators of jumbo mortgages headed to the securitization market, according to industry experts speaking this week at the Mortgage Bankers Association’s annual Secondary Market Conference in New York. All the rating services are putting greater emphasis on understanding originator business practices as part of evaluating jumbo mortgage-backed securities deals, said Sharif Mahdavian, an analyst at Standard & Poor’s ...

Originations that don’t meet standards for qualified mortgages have largely been held in bank portfolios in the months since the Consumer Financial Protection Bureau’s ability-to-repay rule took effect. However, nonbanks are also eyeing the products, and industry participants suggest that non-QMs will eventually be included in non-agency mortgage-backed securities. Laurence Platt, a partner at the law firm of K&L Gates, said a number of hedge funds and investment banks are ...

All three loan-production channels saw significant declines in volume during the first quarter of 2014, but retail had the biggest downturn, according to a new Inside Mortgage Finance ranking and analysis. Retail production declined 24.6 percent from the fourth quarter to an estimated $138 billion, the lowest quarterly volume since the fourth quarter of 2008. Retail lending, which includes traditional loan-origination offices and consumer-direct operations, was down 60.0 percent from the first quarter of last year, slightly worse than the 58.0 percent downturn in the overall market. However, retail is...[Includes four data charts]

In a few months, mortgage insurance giant Radian Group will close on its $305 million cash purchase of Clayton Holdings, ending the “independent” status of one of the nation’s largest MBS due-diligence firms. Almost all the larger due-diligence companies have been gobbled up by larger players over the past 18 months. Most of the acquirers have other interests in the residential finance industry and are betting on the eventual return of the non-agency MBS market. That could be...